þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

OR

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from
to

Commission file number 001-05519

CDI CORP.

(Exact name of Registrant as specified in its charter)

Pennsylvania

23-2394430

(State or other jurisdiction

(I.R.S. Employer

of incorporation or organization)

Identification Number)

1717 Arch Street, 35th Floor, Philadelphia, PA 19103-2768

(Address of principal executive offices)

Registrants telephone number, including area code:
(215)569-2200

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or
15(d)
of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes
þ
No
o

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Section 12b-2 of the Exchange Act.)

Yes
þ
No
o

Outstanding shares of each of the Registrants classes of common stock as
of October 25, 2004 were:

The accompanying consolidated financial statements of CDI Corp. (CDI or the
Company) are unaudited. The balance sheet as of December 31, 2003 is derived
from the audited balance sheet of the Company at that date. These statements
have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission pertaining to reports on Form 10-Q and
should be read in conjunction with the Companys consolidated financial
statements and the notes thereto for the year ended December 31, 2003 reported
in Form 10-K, filed March 12, 2004. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations.

The consolidated financial statements for the unaudited interim periods
presented include all adjustments (consisting of only normal, recurring
adjustments) necessary for a fair presentation of financial position, results
of operations and cash flows for such interim periods. Certain amounts in prior
periods have been reclassified to conform to the current period classification.
In that regard, cash flow from operations and financing activities for the nine
months ended September 30, 2003 were revised by $3.0 million and $3.1 million,
respectively, principally to reflect proceeds from a note receivable.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, revenues and expenses and disclosure of contingent
assets and liabilities. Actual results could differ from those estimates.
Results for the three and nine month periods ended September 30, 2004 are not
necessarily indicative of results that may be expected for the full year or any
portion thereof.

In accordance with Statement of Position 81-1, Accounting for Performance of
Construction-Type and Certain Production-Type Contracts, the Company recorded
revenue and accounts receivable of $0.3 million and $1.2 million for the three
and nine month periods ended September 30, 2004, respectively; reflecting the
anticipated recovery of costs incurred on a contract which is currently in
dispute. Management believes that it is probable that this claim will be
collectible from the customer.

2. Cash, Cash Equivalents and Short-Term Investments

Cash, cash equivalents and short-term investments as of September 30, 2004 and
December 31, 2003 were comprised of the following:

September 30,

December 31,

2004

2003

Cash

$

9,604

5,139

Cash equivalents

24,806

45,091

Total cash and cash equivalents

34,410

50,230

Short-term investments



22,606

Total cash, cash equivalents and short-term investments

$

34,410

72,836

Cash equivalents and short-term investments are in liquid, high quality debt
securities with diversification among the investments based upon the Companys
guidelines. Amortized cost approximates fair value. Gains and losses during the
three and nine month periods ended September 30, 2004 were immaterial. The
decrease in cash, cash equivalents and short-term investments from December 31,
2003 was primarily due to the Companys payments of a special dividend and
three quarterly dividends totaling $45.1 million during 2004.

During the nine months ended September 30, 2004, the Company recorded no
restructuring expenses, as compared to $0.01 million recorded in the first nine
months of 2003. The charge included severances of $0.4 million in connection
with the Companys growth strategy and leadership consolidation plan, partially
offset by a $0.3 million adjustment to a previously estimated provision
for operating lease obligations.

The breakdown of the restructuring expense for 2003 among reporting segments
was as follows:

Three and nine months

ended

September 30, 2003

Business Solutions

$

218

Todays Staffing

(222

)

Management
Recruiters International

130

Corporate

(57

)

$

69

The table presented below shows the current year activity related to previous
restructurings from a balance sheet perspective:

Net Accrual at

Net Accrual at

December 31,

September 30,

2003

Payments

2004

Severance

$

633

(578

)

55

Lease obligations

2,934

(2,178

)

756

$

3,567

(2,756

)

811

The remaining liability for severance will be substantially paid during the
balance of 2004. The Company anticipates that the remaining liability for the
termination of operating leases will be substantially paid by December 31,
2005. The accrual for restructuring charges is included in other accrued
expenses in the accompanying consolidated balance sheets.

4. Real Estate Exit Costs

During the first half of 2004, the Company experienced continued declines in
demand in its Life Sciences vertical within the Business Solutions segment. As
a result, in the second quarter of 2004, management evaluated certain office
space and determined that there was excess real estate capacity within the Life
Sciences vertical. In addition, management also determined that there was
excess real estate capacity in the MRI segment. Accordingly, certain real
estate properties were permanently vacated resulting in the Company recording a
pre-tax charge of approximately $1.0 million in the second quarter of 2004.
This charge is included in operating and administrative expenses in the
accompanying consolidated statements of earnings.

The table presented below shows the current year activity by reportable
segments:

Business

Solutions

MRI

Totals

Balance as of December 31, 2003

$







Charge for real estate exit costs

834

164

998

Payments/reduction of assets

(410

)

(53

)

(463

)

Balance as of September 30, 2004

$

424

111

535

The future payments related to the above lease obligations are expected to
extend through 2006. The accrual for vacant lease obligations is included in
other accrued expenses in the accompanying consolidated balance sheets.

5. Earnings Per Share

Both basic and diluted earnings per share for all periods are calculated based
on the reported earnings in the Companys consolidated statements of earnings.

The number of common shares used to calculate basic and diluted earnings per
share for three and nine months ended September 30, 2004 and 2003 was
determined as follows:

Three months ended

Nine months ended

September 30,

September 30,

2004

2003

2004

2003

Basic

Average shares outstanding

19,699,470

19,449,668

19,646,233

19,405,753

Restricted shares issued not vested

(30,900

)

(45,000

)

(31,025

)

(45,125

)

19,668,570

19,404,668

19,615,208

19,360,628

Diluted

Shares used for basic calculation

19,668,570

19,404,668

19,615,208

19,360,628

Dilutive effect of stock options

191,934

228,913

277,407

198,758

Dilutive effect of restricted
shares issued not vested  time
based

12,068

14,278

10,803

11,075

Dilutive effect of restricted
shares issued not vested
-performance based

375

375

250

250

Dilutive effect of units issuable
under stock purchase plans

101,840

100,393

100,032

109,999

19,974,787

19,748,627

20,003,700

19,680,710

6. Stock Based Plans

The Company uses the intrinsic value method of accounting for stock options and
other forms of stock-based compensation granted to employees and directors, in
accordance with Accounting Principles Board Opinion No. 25 (APB 25),
Accounting for Stock Issued to Employees
. No compensation cost has been
recognized for grants of stock options because option exercise prices are not
less than the fair market value of the underlying common stock at dates of
grant. Compensation cost has been recognized for restricted stock issued and
for units granted under the Stock Purchase Plan.

SFAS No. 123
,
Accounting for Stock Based Compensation"
, uses a fair value
based method of accounting for stock-based compensation. The following table
reflects the pro-forma effect on net earnings and earnings per share for the
three and nine month periods ended September 30, 2004 and 2003 as if the
Company had adopted the fair value recognition provisions of SFAS No. 123:

Three months end

Nine months ended

September 30,

September 30,

2004

2003

2004

2003

Net earnings, as reported

$

2,287

5,973

$

12,432

17,536

Stock-based employee and
director compensation
cost included in
reported earnings, net
of income tax effect

In January 2004, the Company implemented a new structure and leadership
alignment. As a result, the Company is reporting its segments as follows:
Business Solutions, AndersElite, Todays Staffing (Todays) and Management
Recruiters International (MRI). Todays and MRI segments remain unchanged from
prior reporting periods. Prior year segment reporting has been restated to
conform to the new organizational structure.

Business Solutions includes most of the former Professional Services and
Project Management reporting segments. It operates principally through five key
verticals: CDI-Aerospace, CDI-Government Services, CDI-Information Technology
(IT) Services, CDI-Life Sciences and CDI-Process & Industrial (P&I).



CDI-Aerospace provides a full range of engineering, design, project
management, professional IT and engineering staffing and outsourcing
solutions to both the commercial and military aerospace markets.



CDI-Government Services focuses on providing engineering, design and
logistics services to the defense industry and serves as a provider of
IT and professional staffing for federal agencies.



CDI-IT Services provides IT staffing and IT outsourcing solutions to
a broad range of primarily service-based industries.

CDI-P&I provides a full range of engineering, project management,
design, professional staffing and outsourcing solutions to firms in two
different sectors  the process sector which includes firms in oil, gas
and chemicals and the industrial sector which includes firms in power
generation and energy transmission, telecommunications and heavy
manufacturing.

Business Solutions also provides services to businesses in the automotive and
financial services industries.

AndersElite, formerly part of the Professional Services segment, is a leading
United Kingdom firm specializing in sourcing professionals from architects and
surveyors to electrical and construction engineers to information technology
professionals in private and government-funded design and construction
projects.

MRI is a franchisor providing support services to its franchisees who engage in
the search and recruitment of primarily management and sales personnel for
employment by their customers. It also provides temporary management staffing
services.

During June 2004, the Company recorded a pre-tax gain of $1.3 million in
connection with a sale of certain assets and liabilities of its MRI operations.
Under the terms of the sale agreement dated June 30, 2003, the Company received
a $0.5 million non-refundable payment and a non-recourse note with a face value
of $2.2 million. Since a substantial portion of the sales price received was
in the form of a non-recourse note secured only by the business sold, and
completion of the sale was contingent upon the buyer obtaining independent
third-party financing for the remaining purchase price, the Company did not
record this transaction as a sale until the buyer obtained third party funding.
The buyer obtained such third party funding in June 2004 and paid the Company
$2.2 million. The book value of the net assets sold was $1.4 million.

MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking
Information
Certain information in this report, including Managements Discussion and
Analysis of Financial Condition and Results of Operations, contains
forward-looking statements as such term is defined in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Certain forward-looking statements can be identified by the use of
forward-looking terminology such as, believes, expects, may, will,
should,, hopes, seeks, approximately, intends, plans, estimates,
or anticipates or the negative thereof or other comparable terminology, or by
discussions of strategy, plans or intentions. Forward-looking statements
involve risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. These include risks
and uncertainties such as the effects of, and changes in general economic
conditions and capital spending by customers, competitive market pressures,
material changes in demand from larger customers, availability of labor, the
Companys performance on contracts, changes in customers attitudes toward
outsourcing, government policies or judicial decisions adverse to the staffing
industry, and other uncertainties set forth herein and in the Companys 2003
Form 10-K, and as may be set forth in the Companys subsequent press releases
and/or Forms 10-Q, 8-K and other filings with the Securities and Exchange
Commission. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
assumes no obligation to update such information.

Executive Overview

During the third quarter, CDI continued to be significantly negatively impacted
by sluggish capital spending by customers in several of its key vertical
markets, particularly the Process and Industrial (P&I) and Aerospace
verticals of its Business Solutions segment. This depressed capital spend has
been evidenced by ongoing delays in the ramp-up of projects associated with new
contracts wins. The Companys third quarter results were also negatively
impacted by continued softness in the Todays segments local retail business as
well as continued competitive pressures in the national accounts business.
AndersElites and MRIs revenues grew sequentially in the third quarter. The
Companys gross profits in the third quarter were also negatively affected by a
relative increase in lower-margin business compared to higher-margin business.
CDIs net earnings in the third quarter were hurt by substantial increases in
operating and administrative expenses principally due to greater investments
made in hiring recruiting, sales and management personnel, additional
Sarbanes-Oxley compliance expenses, a state unclaimed property audit covering
periods in the 1990s, increased employee-related costs stemming from higher
workers compensation liabilities and increases in state unemployment insurance
(SUI) rates in 2004.

Management believes that the downward revenue trend has stabilized; however,
the Company anticipates lower sequential revenues in the fourth quarter of 2004
due largely to business seasonality. The Company is continuing to see
increased bidding activity in its Business Solutions segment. Management
anticipates that some of the delayed projects will begin in the fourth quarter,
and more of them in the first quarter of 2005. Although the Company has not
yet demonstrated growth in local and regional accounts within its Todays
segment, management continues to focus its efforts in this area where it can
achieve higher gross profit margins versus lower margin national accounts
business. In addition, management believes that its investments in new sales,
recruiting and management personnel, business development and employee
training, particularly at AndersElite, will result in future revenue growth.

The table that follows presents year-over-year trends of key performance
indicators for the Company:

Three months ended

Nine months ended

September 30,

September 30,

(dollars in millions)

2004

2003

2004

2003

Revenues

$

263.3

264.4

$

784.1

803.9

Gross profit as a percentage of revenue

23.7

%

24.0

%

23.8

%

24.5

%

Operating and administrative expenses

$

58.8

54.3

$

169.5

170.7

Operating and administrative expenses as a percentage of revenue

22.3

%

20.5

%

21.6

%

21.2

%

Cash, cash equivalents and short-term investments

$

34.4

59.7

Cash flow provided by operations

$

11.1

4.4

Pre-tax return on equity (1)

9.4

%

12.6

%

(1)

Current quarter combined with the three preceding quarters earnings before
income taxes divided by the average shareholders equity.

Revenue for the three months ended September 30, 2004 decreased by $1.1
million, or 0.4%, as compared to 2003. This decrease was primarily due to:



Ongoing competitive pricing pressures within the Todays segment for
national accounts business, as well as some shrinkage in its retail
account volume.



Reduced demand in the Aerospace and P&I verticals within the Business
Solutions segment resulting from lower capital spending by customers and
to continued delays in new business ramp-up.



Loss of business in the Life Sciences vertical within the Business Solutions segment.

These revenue declines were partially offset by:



Favorable exchange rates associated with the AndersElite segment in the UK.



Revenue growth within the MRI segment primarily due to increases in
franchise royalty revenues resulting from broad based permanent
placement hiring demand.



Increased volume in the Information Technology (IT) vertical within
the Business Solutions segment.

The decrease in gross profit as a percent of revenue in the third quarter of
2004, as compared to 2003 was principally due to:



Continued lower margin mix of business within the Business Solutions
segment as well as price pressures within the IT vertical.



Increased employee-related costs such as SUI and workers
compensation due primarily to adverse experience on several claims
cases.

The decrease in gross profit as a percentage of revenue as described above was
partially offset by higher margins within MRI due largely to the increase in
franchise royalty revenues.

Operating and administrative expenses in the third quarter of 2004 increased by
$4.5 million, or 8.4%, as compared to 2003. This increase was largely
attributable to:



Increased spending of $2.6 million within AndersElite due primarily
to hiring of recruiting, sales and management personnel, driven by
higher than normal staff turnover.



Increased spending related to the Companys Sarbanes-Oxley compliance program of approximately $1.0 million.



Incremental expense of $0.4 million due a state unclaimed property audit covering the periods in the 1990s.

The Companys effective income tax rate for the third quarter of 2004 was
37.3%, as compared to 35.7% in the same period last year. The increase was
primarily due to a favorable resolution of a state tax matter of approximately
$0.3 million, during 2003.

Nine months 2004 versus nine months 2003

Revenue for the nine months ended September 30, 2004 declined by $19.8
million, or 2.5%, as compared to 2003. This decrease was primarily due to
volume declines in Todays of $14.8 million and in Business Solutions of $16.4
million as a result of continued softness in their respective markets and
competitive pricing pressures. This decline is partially offset by a
$14.5 million increase in revenue in AndersElite, almost exclusively due to favorable
exchange rates.

The decline in gross profit as a percent of revenue in the first nine months of
2004 compared to the same period last year was principally due to the same
factors as noted in the third quarter year-over-year discussion above.

Operating and administrative expenses in the nine months ended September 30,
2004 declined by $1.2 million, or 0.8% as compared to 2003. This improvement
was largely due to reductions in variable expenses resulting from lower
year-over-year volume and benefits from various restructuring efforts completed
during 2003. However, these reductions were partially offset by a pre-tax
charge of $1.0 million recorded in the second quarter of 2004 related to real
estate that was permanently vacated and by the same factors noted in the third
quarter year-over-year discussion above.

During the second quarter of 2004, the Company recorded a $1.3 million pre-tax
gain resulting from the sale of the last

Reduced volume and higher mix of lower margin business in the P&I vertical.



Shift in the mix of business in the IT vertical to lower-margin business.

Business Solutions operating and administrative expenses in the first nine
months of 2004 declined by $3.7 million, or 4.1% as compared to 2003. This
improvement was largely due to:



Reductions in variable expenses due to the lower volume.



Benefits from restructuring efforts completed in 2003.



The reversal of a $1.0 million reserve in the second quarter of
2004 because the exposure for which it was originally
established never materialized.

These improvements were partially offset by the increases referred to in the
third quarter year-over-year discussion above.

AndersElite

Below are the comparative operating results of AndersElite for 2004 and 2003 in
U.S. dollars:

For the three months ended

For the nine months ended

Percent

Percent

September 30,

Change

September 30,

Change

2004

2003

(%)

2004

2003

(%)

Revenues

$

43.1

39.4

9.2

$

123.0

108.5

13.3

Gross profit

$

10.6

10.0

6.2

$

30.4

27.5

10.5

Gross profit margin

24.7

%

25.4

%

24.7

%

25.3

%

Operating and administrative expenses

$

9.9

7.3

35.7

$

27.3

21.0

30.2

Operating profit

$

0.7

2.7

(74.4

)

$

3.1

6.5

(53.1

)

To more effectively discuss the comparative results of operations of
AndersElite for the three and nine months ended September 30, 2004 and 2003,
the following tables presents AndersElites results on a constant currency
basis (i.e., British Pounds  £):

On constant currency basis, AndersElites revenues and gross profit decreased
slightly for the three months ended 2004 and were essentially flat for the
first nine months of 2004, as compared to the respective comparable periods in
2003. The declines in revenue for the third quarter and gross profit for both
the third quarter and first nine months of 2004 versus 2003 were primarily due
to lower staffing revenue resulting from significant re-staffing of its
recruiting and sales personnel and the inherent delay before newly hired sales
staff generate revenue.

On a constant currency basis, AndersElites operating and administrative
expenses increased 21.5% and 15.8% in the third quarter and first nine months
of 2004, respectively, over the same periods last year. This increase was
largely due to :



Investments made in hiring recruiting, sales and management
personnel due to higher-then-normal staff turnover, resulting in part
from competitive pressures.



Incremental hiring to standardize and upgrade business development
and training capabilities to position AndersElite for future growth.

Todays revenue for the third quarter of 2004 declined by $5.0 million, or
14.5%, as compared to the third quarter 2003. For the nine months ended
September 30, 2004 revenues declined by $14.8 million or 14.1% as compared to
the same period in 2003.

These decreases were primarily due to:



Continued volume declines in the higher-margin retail accounts.



Ongoing pricing pressures on national accounts.

In response to this trend, management has established a dedicated team to more
effectively manage and grow its national accounts while also redirecting local
office efforts to grow both high margin retail accounts and permanent placement
revenue.

Todays gross profit for the third quarter of 2004 declined by $1.2 million, or
13.3 %, as compared to the third quarter 2003. For the nine months ended
September 30, 2004 gross profit declined by $4.9 million, or 16.8 %, as
compared to the same period in 2003. These decreases were primarily due to the
volume declines noted above.

Todays operating and administrative expenses in the third quarter of 2004 were
flat in comparison to the same period in 2003. This was largely due to
reductions in variable expenses due to lower volume, offset by higher
investment in hiring sales and recruitment management personnel.

The operating and administrative expenses in the first nine months of 2004
declined 5.6% as compared to 2003. This decline was due to reductions in
variable expenses, offset in part by increased charges for ramping up sales and
recruitment staff.

Management Recruiters International (MRI)

For the three months ended

For the nine months ended

Percent

Percent

September 30,

Change

September 30,

Change

(dollars in millions)

2004

2003

(%)

2004

2003

(%)

Revenues

$

14.1

13.0

8.4

$

41.9

44.8

(6.6

)

Gross profit

$

9.8

8.2

19.3

$

28.7

28.7



Gross profit margin

69.5

%

63.1

%

68.6

%

64.1

%

Operating and
administrative expenses

$

7.1

7.2

(1.3

)

$

21.2

25.2

(15.9

)

Gain on sale of asset







$

1.3





Operating profit

$

2.7

0.9

200.4

$

8.8

3.5

155.6

Third quarter 2004 versus third quarter 2003

MRIs revenue for the three months ended September 30, 2004 increased by $1.1
million, or 8.4% as compared to 2003. This increase was primarily due to
increased franchise royalty revenues of 22% over last year resulting from an
increase in permanent placement activity within the MRI franchise network.
This increase was partially offset by lower temporary management and specialty
staffing revenue.

MRIs gross profit of $9.8 million for the third quarter of 2004 increased by
$1.6 million or 19.3 % as compared to 2003. This

increase was principally due to the higher margin franchise royalty revenues.

MRIs operating and administrative expenses in the third quarter of 2004 were
essentially flat to 2003 largely due to expense containment measures instituted
in 2004.

Nine months 2004 versus nine months 2003

MRIs revenue for the nine months ended September 30, 2004 declined by $2.9
million, or 6.6% as compared to 2003. This decrease was primarily due to:



Exit of the last of the company- owned offices in the first half of 2003.



Lower temporary management and specialty staffing revenue.

This decline was partially offset by higher franchise royalty revenues and
franchise sales.

MRIs gross profit of $28.7 million for the first nine months of 2004 was flat
as compared to 2003 due largely to the gross profit on the increase of
franchise royalty revenues being offset by the lost gross profit from the
exiting of company-owned offices in 2003.

MRIs operating and administrative expenses in the nine months ended September
30, 2004 declined by $4.0 million, or 15.9% as compared to 2003. This
improvement was largely due to :



Expense containment measures instituted in 2004.



Reduction of operating expenses due to the exit of the last of company-owned offices in the first half of 2003.

Corporate Expenses

Corporate expenses were $4.7 million for the third quarter of 2004, as compared
to $2.9 for the third quarter of 2003. This increase was primarily due to
incremental spending for Sarbanes-Oxley compliance of $0.8 million, higher
employee expenses associated with new hires of $0.5 million and higher legal
expenses of $0.2 million related to several ongoing litigation matters. During
the first nine months of 2004, corporate expenses were $11.5 million, as
compared to $10.0 million for the same period of 2003. This increase was
primarily due to incremental spending for Sarbanes-Oxley compliance
of $1.2
million and higher legal expenses of $0.3 million, as previously noted.

Liquidity and Capital Resources

The following table summarizes the major captions from the Companys
Consolidated Statements of Cash Flows:

Nine months ended

September 30,

(in millions)

2004

2003

Cash provided by (used in):

Operating Activities

$

11.1

$

4.4

Investing Activities

$

19.9

$

20.4

Financing Activities

$

(46.7

)

$

(36.1

)

Operating Activities

During the first nine months of 2004, CDI generated approximately $11.1 million
of cash flows from operating activities, as compared to $4.4 million during the
same period in 2003. This increase in operating cash flow primarily reflects
the Companys continued improvement in its working capital management.

Investing Activities

CDI invested $5.1 million in the first nine months of 2004 for purchases of
property and equipment versus $11.8 million in the

corresponding period of 2003. During the first nine months of 2003, the Company
incurred capital expenditures to support the acquisition, configuration and
implementation of a new back-office accounting system. Cash generated from
operating activities has been conservatively invested and is readily available
to fund Company operations and investment opportunities. During the nine month
period ended September 30, 2004, the Company sold $22.6 million of short-term
investments principally to fund the payment of dividends aggregating $45.1
million during 2004.

Financing Activities

The Company paid shareholders a special dividend and three quarterly dividends
totaling $45.1 million during the nine month period ended September 30, 2004.
Additionally, CDI reduced its level of obligations not liquidated because of
outstanding checks due to its ongoing focus on working capital management.

Summary

At September 30, 2004, cash and cash equivalents totaled $34.4 million, and the
Company had no bank debt. Management believes that its current funds and funds
generated from operations will be sufficient to meet currently anticipated
working capital, dividends and other capital requirements. Should the Company
require additional funds in the future, management believes that it will be
able to obtain these funds at competitive rates.

On October 20, 2004, the Company declared a quarterly dividend of $0.11 per
share, payable on November 17, 2004. The declaration and payment of any future
dividends will be at the discretion of the Companys Board of Directors and
will depend upon many factors including the Companys earnings, financial
condition and capital requirements.

Critical Accounting Policies and Estimates

These financial statements were prepared in accordance with generally accepted
accounting principles, which require management to make subjective decisions,
assessments and estimates about the effect of matters that are inherently
uncertain. As the number of variables and assumptions affecting the judgment
increases, such judgments become even more subjective. While management
believes its assumptions are both reasonable and appropriate, actual results
may be materially different than estimated. The critical accounting policies,
estimates and assumptions identified in the Companys 2003 Annual Report on
Form 10-K filed March 12, 2004 with the Securities and Exchange Commission have
not materially changed.

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to risks associated with foreign currency fluctuations
and changes in interest rates. The Companys exposure to foreign currency
fluctuations relates to its operations in foreign countries conducted
principally through subsidiaries operating primarily in the United Kingdom and
Canada. Exchange rate fluctuations impact the U. S. dollar value of reported
earnings derived from these foreign operations as well as the carrying value of
the Companys investment in the net assets related to these operations. During
the first quarter of 2004, the Company entered into a foreign exchange put
option contract to hedge a portion of its U.K. foreign operations 2004
forecasted net earnings. The effects of foreign currency exchange rate
fluctuations on CDIs consolidated earnings historically have been immaterial.

The Companys exposure to interest rate changes is not significant. As of
September 30, 2004, there were no bank borrowings and only immaterial amounts
of other debt outstanding, none of which was variable rate debt. The Companys
investment in money market and other short-term instruments are primarily at
variable rates.

Item 4.

CONTROLS AND PROCEDURES

The Company has conducted an evaluation of the effectiveness of its disclosure
controls and procedures under the supervision of its Chief Executive Officer
and its Chief Financial Officer as of September 30, 2004. Based on this
evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that the Companys disclosure controls and procedures are effective
in providing reasonable assurance that information required to be disclosed by
the Company in reports filed under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported upon in such reports within the
time periods specified for their filing. It should be noted that the design of
any system of controls is based in part on certain assumptions

about the likelihood of future events. A control system, no matter how well
designed and implemented, can provide only reasonable, not absolute assurance,
that the objectives of the control system will be met.

There have been no significant changes in the Companys internal control over
financial reporting that occurred during the most recently completed fiscal
quarter that materially affected, or are reasonably likely to materially
affect, the Companys internal control over financial reporting.

PART II. OTHER INFORMATION

Item 6.

EXHIBITS

10.

Form of Stock Option Agreement between the Company and recipients of stock option grants,
including executive officers. (Constitutes a management contract or compensatory plan or
arrangement)

31.a.

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.b.

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

The CDI Corp. Board of Directors Compensation Committee, pursuant to the
authority granted to it by the CDI Corp. Board of Directors to administer the
CDI Corp. 2004 Omnibus Stock Plan (the Plan), hereby grants to [INSERT NAME]
(Optionee) an option (the Option when reference is made to the right to
purchase all of the Shares) to purchase up to [INSERT NUMBER OF SHARES] shares
of CDI Corp. common stock (the Shares when reference is made to all or a
portion of the shares subject to the Option), according to the terms and
conditions set forth herein and in the Plan.

Section 2. Other Definitions.

(a) Board means the Board of Directors of the Company.

(b) Cause shall have the same meaning as is set forth in an employment
or engagement agreement between Optionee and the Company. If there is no such
agreement, then Cause shall mean:

(i)

Optionees rendering services while
under the influence of alcohol or illegal drugs;

(ii)

Optionees performing any act of
dishonesty, other than an act of immaterial
consequences, in rendering services to the Company,
including without regard to materiality, falsification
of records, expense accounts or other reports;

(iii)

Optionees conviction, whether by
judgment or plea, of any crime which constitutes a
felony or which constitutes a misdemeanor involving
violence, fraud, embezzlement or theft;

(iv)

Optionees violation of any law or
agreement which results in the entry of a judgment or
order enjoining or preventing Optionee from such
activities as are essential for Optionee to perform
services for the Company;

(v)

Optionees violation of any of the
Companys policies which provide for termination of
employment as a possible consequence of such violation;

(vi)

Optionees engaging in conduct which
is injurious (other than to an immaterial extent) to the
Company;

(vii)

the Companys receipt of reliable
information from any source of Optionees entering into
or intending to enter into competition with the Company;
or

(viii)

refusal to perform such duties as may be delegated or
assigned to Optionee, consistent with Optionees
position, by his or her supervisor.

(c) Code shall mean the Internal Revenue Code of 1986, as amended.

(d) Committee means the Compensation Committee of the Board, or its
successor.

(e) Company, as the context requires, means CDI Corp., CDI Corp. and its
subsidiaries or the individual subsidiary of CDI Corp. which employs or retains
Optionee. As applied to a director of the Company, the term Company means
CDI Corp. except for purposes of Section 9.

(f) Date of Exercise means the date on which the notice required by
Section 10 below is received by the Company or its agent.

(g) Date of Grant means [INSERT DATE], the date on which the Option is
granted.

(h) Disability shall mean a physical, mental or other impairment within
the meaning of section 22(e)(3) of the Code.

(i) Fair Market Value means an amount equal to the closing price of
actual sales of Stock on the New York Stock Exchange composite tape on a given
date or, if there are no such sales on such date, the closing price of Stock on
such Exchange on the last preceding date on which there was a sale.

(j) Option Price means [INSERT PRICE].

(k) Retirement means Optionees leaving the employ of the Company:

(i)

on or after the date that Optionee
satisfies one of the following combinations of age and
years of service with the Company:



60 years of age and 20 years of service;



62 years of age and 15 years of service; or



65 years of age and 5 years of service; or

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(ii)

at such earlier date as may be
approved by the Committee, in its sole discretion.

(l) Stock means CDI Corp. common stock, par value $.10 per share.

(m) Termination Date means the earliest of the following:

(i)

[the date seven years following the
Date of Grant];

(ii)

in the event Optionees employment or
engagement with the Company is terminated by the Company
for Cause, the date of such termination;

(iii)

in the event Optionees employment
or engagement with the Company is terminated through
Optionees resignation or by the Company for reasons
other than for Cause, two weeks following the date of
such termination;

(iv)

in the event Optionees employment or
engagement with the Company is terminated as a result of
Optionees death, Disability or Retirement, six months
following such event;

(v)

such other date as may be determined
by the Committee.

A transfer of employment between the Company and an affiliate
of the Company shall not be deemed a termination of
employment.

Section 3. Time of Exercise.

No Option shall be exercisable with respect to any Shares unless the
Option has vested with respect to such Shares in accordance with Section 4
hereof. If vested, the Option may be exercised at any time after vesting until
the Termination Date in whole or in part.

Section 4. Option Vesting

(a) Subject to the accelerated vesting provision of Section 4 (b), and
unless otherwise determined by the Committee, the Option will vest at the rate
of 20% per year on each of the first five anniversaries of the Date of Grant.

(b) If Optionees employment with the Company terminates as a result of
death, Disability or Retirement, the Option will vest as to all unvested shares
as of the date of such event.

Section 5. Withholding.

Optionee shall be responsible for making appropriate provisions for all
taxes, including, without limitation, federal, state, local or foreign income
or payroll taxes, required by law to be withheld in connection with the Option,
including the exercise of the Option. Optionee

-3-

shall pay the necessary amount to the Company in cash or agree to accept
in full satisfaction of the Option hereunder the net number of Shares remaining
after provision for the withholding taxes. Optionees failure to tender the
required withholding amount within three days of the Companys request for that
amount shall constitute agreement to accept the net number of Shares remaining
after provision for withholding taxes, plus cash in lieu of any remaining
fractional share. The portion of any Shares withheld pursuant to the
applicable federal, state and local tax laws shall be determined by using the
Fair Market Value of the Stock on the last trading day immediately preceding
the date that such Stock is received pursuant to the exercise of the Option.

Section 6. Payment for Shares by Optionee
.

The Option Price of the shares of Stock to be received upon the exercise
of the Option shall be paid within three days of the Date of Exercise: (i) in
cash, or, (ii) with the consent of the Committee which shall be granted only if
the Committee is satisfied that the proposed arrangement is consistent with the
requirements of section 402 of the Sarbanes-Oxley Act of 2002, with the
proceeds received from a broker-dealer whom the Optionee has authorized to sell
all or a portion of the Stock covered by the Option, or (iii) with the consent
of the Committee, in whole or in part in Stock held by the Optionee for at
least six months and valued at Fair Market Value on the Date of Exercise. With
the consent of the Committee, payment upon the exercise of a non-qualified
option may be made in whole or in part by restricted stock which has been held
by the Optionee for at least six months (based on the Fair Market Value of the
restricted stock on the Date of Exercise, as determined by the Committee). In
such case, the Stock to which the Option relates shall be subject to the same
forfeiture restrictions originally imposed on the Restricted Stock exchanged
therefor.

Section 7. Nontransferability of Option.

The Option may not be pledged, assigned or transferred, in whole or in
part, unless the Option is transferred (i) by will or the applicable laws of
descent and distribution or (ii) with the prior written approval of the
Committee, to the spouse or descendant of the Optionee or a trust for the
benefit of the spouse or descendants (but any such transfer shall, in all
cases, be subject to the provisions of this Agreement).

Section 8. Stock Ownership Standards.

If Optionee is subject to any stock ownership standards imposed by the
Company, those standards may affect Optionees ability to sell or otherwise
transfer some or all of the Shares purchased by Optionee through the exercise
of this Option.

Section 9. Cancellation of Options and Repayment of Gains.

Notwithstanding any other provision of this Agreement, if the Committee
determines that Optionee has entered into or intends to enter into competition
with the Company or its Subsidiaries, the Committee may, in its discretion, at
any time during the term of the non-competitive covenant, if any, in the
employment agreement or engagement agreement between Optionee and the Company
which is being violated by such competition, cancel the outstanding Options
granted to Optionee and/or require Optionee to pay to the Company an amount
equal to

-4-

any gains derived from the exercise of any Options previously granted to
and exercised by Optionee during the one year period prior to the termination
of Optionees employment or engagement with the Company.

Section 10. Manner of Exercise.

The Option can be exercised by logging on to www.mellon-investor.com or by
calling (888) 767-0102. Optionee will need his or her PIN number.

Section 11. Securities Laws.

The Committee may from time to time impose any conditions on the exercise
of the Option as it deems necessary or advisable to ensure that all options
granted under the Plan, and the exercise thereof, satisfy Rule 16b-3 (or any
similar rule) of the Securities and Exchange Commission. Such conditions may
include, without limitation, the partial or complete suspension of the right to
exercise the Option.

Section 12. Issuance of Certificates; Payment of Taxes.

(a) The Option can only be exercised as to a whole number of shares of
Stock. Upon exercise of the Option and payment of the Option Price, a
certificate for the number of shares of Stock purchased through the exercise
will be issued and delivered by the Company to Optionee, provided that Optionee
has remitted to the Company an amount, determined by the Company, sufficient to
satisfy the applicable requirements to withhold federal, state, and local
taxes, or made other arrangements with the Company for the satisfaction of such
withholding requirements.

(b) Subject to the provisions of Section 11 above, the Company may also
condition delivery of certificates for shares of Stock upon the prior receipt
from Optionee of any undertakings that it determines are required to ensure
that the certificates are being issued in compliance with federal and state
securities laws.

Section 13. Rights Prior to Issuance of Certificates.

Neither Optionee nor the person to whom Optionees rights shall have
passed by will or by the laws of descent and distribution shall have any of the
rights of a shareholder with respect to any shares of Stock issuable upon
exercise of the Option until the date of issuance to Optionee of a certificate
for such shares as provided in Section 12 above.

Section 14. Option Not to Affect Employment Relationship.

The Option shall not confer upon Optionee any right to continue in the
employ or service of the Company, nor shall the Option interfere in any way
with the right of the Company to terminate the employment or engagement of
Optionee at any time.

any other change in the corporate structure of the Company affecting the
Stock, or any distribution to stockholders other than a cash dividend, the
Board shall make such adjustments to the aggregate number of Shares subject to,
and the Option Price of, any then outstanding Options as it determines
appropriate. No fractional shares of Stock shall be issued pursuant to such an
adjustment. The Fair Market Value of any fractional shares resulting from
adjustments pursuant to this Section shall, where appropriate, be paid in cash
to the Optionee.

Section 16. Interpretation.

The Committee shall have the sole power to interpret this Agreement and to
resolve any disputes arising hereunder.

The undersigned acknowledges receipt of this Stock Option Agreement and
agrees to its terms:

Optionee

[INSERT NAME]

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Exhibit 31.a

CERTIFICATION

I, Roger H. Ballou, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of CDI Corp.;

2.

Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;

3.

Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;

4.

The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:

a)

designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;

b)

evaluated the effectiveness of the registrants disclosure
controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based upon such
evaluation; and

c)

disclosed in this report any change in the registrants
internal control over financial reporting that occurred during the
registrants most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrants internal control over financial reporting; and

5.

The registrants other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrants auditors and the audit committee of the registrants
board of directors (or persons performing the equivalent functions):

a)

all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrants
ability to record, process, summarize and report financial
information; and

b)

any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal control over financial reporting.

Date: November 8, 2004

By:

/s/
Roger H. Ballou

Roger H. Ballou

President and Chief Executive Officer

Exhibit 31.b

CERTIFICATION

I, Jay G. Stuart, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of CDI Corp.;

2.

Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;

3.

Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this report;

4.

The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:

a)

designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being prepared;

b)

evaluated the effectiveness of the registrants
disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by
this report based upon such evaluation; and

c)

disclosed in this report any change in the
registrants internal control over financial reporting that
occurred during the registrants most recent fiscal quarter that
has materially affected, or is reasonably likely to materially
affect, the registrants internal control over financial
reporting; and

5.

The registrants other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent
functions):

a)

all significant deficiencies and material weaknesses
in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrants ability to record, process, summarize and report
financial information; and

b)

any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal control over financial reporting.

Date: November 8, 2004

By:

/s/ Jay G. Stuart

Jay G. Stuart

Executive Vice President and Chief Financial
Officer

EXHIBIT 32.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CDI Corp. (the Company) on Form
10-Q for the three-month period ended September 30, 2004 as filed with the
Securities and Exchange Commission on the date hereof (the Report), the
undersigned Chief Executive Officer and Chief Financial Officer of the Company
hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the
Sarbanes-Oxley Act of 2002, that: 1) the Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
and 2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company as
of and for the periods covered in the Report.

By:

/s/ Roger H. Ballou

Roger H. Ballou

President and Chief Executive Officer

Dated: November 8, 2004

By:

/s/ Jay G. Stuart

Jay G. Stuart

Executive Vice President and
Chief Financial Officer

Dated: November 8, 2004

A signed original of this written statement required by Section 906 has been
provided to CDI Corp. and will be retained by CDI Corp. and furnished to the
Securities and Exchange Commission or its staff upon request.